Algura vs.

Naga

FACTS:
Spouses Algura filed a complaint for damages the Naga City Government and its officers, arising
from the alleged illegal demolition of their residence and boarding house. Simultaneously, they also filed
an Ex Parte Motion to litigate as indigent litigants.
However, the trial court issued an Order disqualifying petitioners as indigent litigants on the
ground that they failed to substantiate their claim for exemption from payment of legal fees and to comply
with the third paragraph of Rule 141, Section 18 of the Revised Rules of Court— directing them to pay the
requisite filing fees.
The trial court ratiocinated that the pay slip of Antonio F. Algura showed that his monthly income
or earnings was P10,474.00 which amount was over and above the amount mentioned in the first
paragraph of Rule 141, Section 18 for pauper litigants residing outside Metro Manila. Said rule provides
that the gross income of the litigant should not exceed P3,000.00 a month and shall not own real estate
with an assessed value of P50,000.00.
Petitioners however argue in their Motion for Reconsideration of the Order disqualifying them as
indigent litigants that the rules have been relaxed by relying on Rule 3, Section 21 of the 1997 Rules of
Civil procedure which authorizes parties to litigate their action as indigents if the court is satisfied that the
party is "one who has no money or property sufficient and available for food, shelter and basic necessities
for himself and his family." The trial court did not give credence to this view of petitioners and simply
applied Rule 141 but ignored Rule 3, Section 21 on Indigent Party. Hence, this petition filed by petitioner
spouses.

ISSUE:
Whether or not petitioners should be considered as indigent litigants who qualify for exemption
from paying filing fees.

RULING:
The Court rules that Rule 3, Section 21 of the Revised Rules of Court and Rule 141, Section 16 later
amended as Rule 141, Section 18 on March 1, 2000 and subsequently amended by Rule 141, Section 19
on August 16, 2003, which is now the present rule) are still valid and enforceable rules on indigent
litigants.

The Court opts to reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is a settled principle
that when conflicts are seen between two provisions, all efforts must be made to harmonize them. Hence,
"every statute [or rule] must be so construed and harmonized with other statutes [or rules] as to form a
uniform system of jurisprudence."

In the light of the foregoing considerations, therefore, the two (2) rules can stand together and are
compatible with each other. When an application to litigate as an indigent litigant is filed, the court shall
scrutinize the affidavits and supporting documents submitted by the applicant to determine if the applicant
complies with the income and property standards prescribed in the present Section 19 of Rule 141—that
is, the applicant's gross income and that of the applicant's immediate family do not exceed an amount
double the monthly minimum wage of an employee; and the applicant does not own real property with a
fair market value of more than PhP 300,000.00. If the trial court finds that the applicant meets the income
and property requirements, the authority to litigate as indigent litigant is automatically granted and the
grant is a matter of right.

However, if the trial court finds that one or both requirements have not been met, then it would set a
hearing to enable the applicant to prove that the applicant has "no money or property sufficient and
available for food, shelter and basic necessities for himself and his family." In that hearing, the adverse
party may adduce countervailing evidence to disprove the evidence presented by the applicant; after
which the trial court will rule on the application depending on the evidence adduced. In addition, Section
21 of Rule 3 also provides that the adverse party may later still contest the grant of such authority at any
time before judgment is rendered by the trial court, possibly based on newly discovered evidence not
obtained at the time the application was heard. If the court determines after hearing, that the party
declared as an indigent is in fact a person with sufficient income or property, the proper docket and other
lawful fees shall be assessed and collected by the clerk of court. If payment is not made within the time
fixed by the court, execution shall issue or the payment of prescribed fees shall be made, without
prejudice to such other sanctions as the court may impose.

The Court concedes that Rule 141, Section 19 provides specific standards while Rule 3, Section 21 does
not clearly draw the limits of the entitlement to the exemption. Knowing that the litigants may abuse the
grant of authority, the trial court must use sound discretion and scrutinize evidence strictly in granting
exemptions, aware that the applicant has not hurdled the precise standards under Rule 141. The trial
court must also guard against abuse and misuse of the privilege to litigate as an indigent litigant to
prevent the filing of exorbitant claims which would otherwise be regulated by a legal fee requirement.

Thus, the trial court should have applied Rule 3, Section 21 to the application of the Alguras after their
affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on
gross monthly income and ownership of real property under Rule 141. Instead of disqualifying the Alguras
as indigent litigants, the trial court should have called a hearing as required by Rule 3, Section 21 to
enable the petitioners to adduce evidence to show that they didn't have property and money sufficient and
available for food, shelter, and basic necessities for them and their family. In that hearing, the
respondents would have had the right to also present evidence to refute the allegations and evidence in
support of the application of the petitioners to litigate as indigent litigants. Since this Court is not a trier of
facts, it will have to remand the case to the trial court to determine whether petitioners can be considered
as indigent litigants using the standards set in Rule 3, Section 21.

Recapitulating the rules on indigent litigants, therefore, if the applicant for exemption meets the salary and
property requirements under Section 19 of Rule 141, then the grant of the application is mandatory. On
the other hand, when the application does not satisfy one or both requirements, then the application
should not be denied outright; instead, the court should apply the "indigency test" under Section 21 of
Rule 3 and use its sound discretion in determining the merits of the prayer for exemption.

WHEREFORE, the petition is GRANTED and the Order granting the disqualification of petitioners, are
ANNULLED and SET ASIDE. Furthermore, the Naga City RTC is ordered to set the "Ex-Parte Motion to
Litigate as Indigent Litigants" for hearing and apply Rule 3, Section 21 of the 1997 Rules of Civil
Procedure to determine whether petitioners can qualify as indigent litigants.